London-based FinTech company Monzo has pulled back its application for a U.S. banking license, according to a Monday (Oct. 4) report from CNBC.
The withdrawal from U.S. operations comes on the heels of a recent cyberattack involving a fraudster who used a Monzo account and a payments initiation service provider (PISP) to steal millions of pounds from Barclays accounts, according to PYMNTS. PISPs were introduced by the revised European Payment Service Directive and give retail customers the ability to pay companies directly from their bank account instead of using a debit or credit card.
According to CNBC, the decision to pull back its U.S. banking license application came after discussions with regulators at the Office of the Comptroller of the Currency.
Monzo has come under fire in recent months for allegedly violating anti-money laundering laws (AML), according to PYMNTS. In July, the Financial Conduct Authority (FCA) launched an investigation over possible violations which could include criminal and civil liability, PYMNTS reports.
Monzo, a digital bank which operates with only an ATM and an app, began the process of applying for a U.S. banking license in April 2020 to broaden its customer base, according to CNBC. The bank has 5.5 million account holders in the U.K., according to its website.
While it appears Monzo’s plans to expand into the U.S. have been put on hold, the company is expanding in other ways. Last month, Monzo announced an effort aimed at simplifying the bill-paying and household budgeting process by allowing its Monzo Plus and Monzo Premium account holders to make card payments from their various “pots” or digital piggy banks, according to PYMNTS.
Monzo originally operated through a mobile app and prepaid debit card. In April 2017, its U.K. banking license restrictions were removed, enabling it to offer a current account, according to PYMNTS.